Both business-to-business and business-to-consumer sales transactions are based on oral or written agreements between the buyer and the seller dictating the terms of the sale, e.g., the purchase price, the delivery date, the date by which payment must be received. This is also the case for agreements which have been entered by online communication, such as by means of an online marketplace, online shop or other means of electronic procurement.
It is common for the seller to extend credit to the buyer so that payment is not due until some time after the delivery of goods or services. This line of credit is often referred to as an “open account trade credit” or simply an “open account” and usually works well between regular trading partners who have established credit worthiness. In commerce between a buyer who is unknown to the seller, trading with an open account incurs substantial risk on the part of the seller. The risk is essentially related to the buyers ability and/or willingness to meet the payment terms of the sales agreement.
For this reason, there are many commercial credit reporting agencies such as Creditreform, TRW, EQUIFAX, and Dun & Bradstreet which provide information about the credit worthiness of individuals or businesses. When dealing with an unknown buyer, the seller must undertake to obtain credit rating information about the buyer, analyze the information, decide whether to deal with the buyer. In particular, the buyer may adjust the selling price based on the degree of risk which is expected based on the credit report.
U.S. Pat. No. 5,732,400 discloses a system and method for enabling on-line transactional services among sellers and buyers having no previous relationship with each other. The system includes a financial clearinghouse for receiving a request for goods or services from a buyer and making a real-time determination of a risk classification of the buyer utilizing an on-line repository of credit information. The financial clearinghouse determines a risk-based discount fee as a function of the buyer's risk classification in order to establish a payment amount to the seller from the clearinghouse. If the transaction is authorized by the financial clearinghouse, the financial clearinghouse transmits the payment amount to the seller and transmits an invoice to the buyer for the purchase price of the transaction. The system can also include a broker coupled to the financial clearinghouse for providing an on-line order acceptance and processing capability between the buyers and sellers. This system attempts to facilitate the process of credit analysis and pricing based on credit worthiness.
A disadvantage of this system is that it does not enable automatic communication with various credit reporting agencies as such credit reporting agencies usually have their proprietary interfaces.